Research can help solve banking problems: analysts

The country's banking industry is plagued by rising nonperforming loans (NPL), governance and internal control failures, liquidity gluts and slow credit growth, experts said yesterday.

The problems can be addressed through rigorous studies and research, they added, speaking at a two-day international conference for bankers and academics at the Bangladesh Institute of Bank Management or BIBM.

BIBM and Australian Academy for Business and Social Sciences jointly organised the programme attended by bankers, academics, researchers, practitioners and policymakers from home and abroad.

“Bangladesh has an expanding banking sector, which despite some problems, like a growing default culture, inadequate accountability and non-optimal transparency, has served the economy rather well,” said Mohammed Farashuddin, former governor of Bangladesh Bank, in a keynote presentation at the inaugural session. Farashuddin, who led a probe committee on the $81 million BB heist, also stressed the need for appropriate reforms, including a boldly implemented regulatory system to reap the benefits of technological advancements. “If the reforms are put in place, the greater use of technology will add strength to productivity and growth of the Bangladesh economy,” he said.

He also spoke on the trends of the Bangladesh economy and why it was immune to the impacts of the global financial crisis. Toufiq Ahmad Choudhury, director general of BIBM, said banks need to carry out research regularly to be operationally efficient.

A bank needs to undertake research even to open a new branch or product, he added. Khondkar Ibrahim Khaled, former deputy governor of Bangladesh Bank, who chaired a session, said regulators such as BB and the Bangladesh Securities and Exchange Commission have been facing an image crisis.

BB Governor Fazle Kabir said the central bank has heightened surveillance over the banks and financial institutions.

“The risk management and corporate governance practices of banks have been brought under close supervisory scrutiny to arrest the increasing incidence of nonperforming loans,” he said.

Kabir, who took charge of the central bank in March after the $81 million heist of BB funds in February, said ensuring digital security is a big challenge for him.

“Heightened attention to ensuring digital safety measures to secure payment systems at global standards has been a priority agenda of Bangladesh Bank,” said the governor. He hoped interactions between the banking community and academics at this conference would generate useful input for the policymakers.

A total of 65 papers were presented in the concurrent sessions throughout yesterday. There will be three workshops on the current issues of economy and the financial sector.